Whether you are looking to start a college fund, retirement fund, vacation fund, second house fund or simply looking for an alternative to the stock market, Investment-Grade Wines (IGWs), as an asset class, have an excellent track record. With an uncertain economy, alternate investments such as wine are gaining popularity for good reason. IGW’s have dependably outperformed the S&P 500 Index over most time frames in recent history (see below). Wine’s new found popularity has given rise to new mediums which allow independent investors to buy and sell wine. Liv-Ex, a wine exchange based in London, but open to wine investors around the world, is one such medium.

To be sure, the wine market has been affected by the economy like most every other asset class. However, it has not been hit as hard. If you look at the five First Growth Wines from Bordeaux, the most widely traded wines, you will see an average appreciation over the last 27 years (1982-2009) of 4400%!! In that same period, the S&P 500 has increased by 524%.

1982 was an outstanding vintage and the First Growths presented incredible investment opportunities. Many, such as Robert Parker, believe the same is true of the 2005 vintage. Furthermore, it is widely believed that the 2008 vintage will also be great, although not quite as spectacular as 2005 or 2000. Investment in wine, like any other investment, depends upon your time horizon, and history is no guarantee of future performance.

The chart below compares historical prices of the five First Growth Wines vs. S&P 500. Prices listed are per bottle as per Liv-Ex using the current exchange rate $1.35/Euro: